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Most Read: Gcl Poly Energy Holdings Limited, Seven & I Holdings, Link Administration, SK IE Technology and more

By | Daily Briefs, Most Read

In today’s briefing:

  • FTSE All-World/​​All-Cap Index Rebalance Preview: Some Big Changes in China
  • Index Rebalance & ETF Flow Recap: FTSE JP, HSTECH, HSCEI, PCOMP, GCL Tech, Tencent, Tianqi Lithium
  • Seven & I Sale of Sogo Seibu Moves Closer
  • Merger Arb Mondays (04 Jul) – Link Admin, Ramsay, DTAC/True, Australian Unity Office Fund, Yashili
  • WISE Theme Indexes (TIGER ETFs): Rebalancing Flow Estimations

FTSE All-World/​​All-Cap Index Rebalance Preview: Some Big Changes in China

By Brian Freitas

  • The price review period for the FTSE All-World/All-Cap September 2022 SAIR ended on 30 June. The changes are expected to be announced on 19 August and implemented on 19 September.
  • There are a lot of potential inclusions to the indices for China -some changes are a result of stocks being included in Northbound Stock Connect.
  • Gcl Poly Energy Holdings Limited (3800 HK) is the largest potential inclusion (in terms of passive flow) in the index following resumption of trading in November 2021.

Index Rebalance & ETF Flow Recap: FTSE JP, HSTECH, HSCEI, PCOMP, GCL Tech, Tencent, Tianqi Lithium

By Brian Freitas


Seven & I Sale of Sogo Seibu Moves Closer

By Michael Causton

  • Initial reports suggest that Fortress Investment, part of the Softbank group of funds, is now the frontrunner in negotiations to acquire Sogo Seibu department stores from Seven & I.
  • Reports suggest Fortress is already in discussions with privately owned retailer Yodobashi Camera to take over management of the chain’s better stores, beginning with Seibu Ikebukuro.
  • The loss of ¥500 billion or so in turnover won’t be missed not will the ¥8.8 billion losses but activist investors won’t stop there.

Merger Arb Mondays (04 Jul) – Link Admin, Ramsay, DTAC/True, Australian Unity Office Fund, Yashili

By Arun George


WISE Theme Indexes (TIGER ETFs): Rebalancing Flow Estimations

By Sanghyun Park

  • Among the local theme indexes in Korea, we have three noteworthy ones for July. They are the WISE theme indexes. They will all rebalance on July 15.
  • Due to some constituents’ recent significant price movements, we can now expect some notable passive flows.
  • These names are worthy of our attention: SKIET, Solus Advanced, Kangwon Land, Hanatour, T’way Air, Yong Pyong Resort, HYBE, CJ ENM, and Studio Dragon.

Before it’s here, it’s on Smartkarma

Most Read: HKEX, Hang Seng China Enterprises Index, Hong Kong Hang Seng Index, Gcl Poly Energy Holdings Limited, Korea Stock Exchange Kospi 200 Index and more

By | Daily Briefs, Most Read

In today’s briefing:

  • ETFs in Stock Connect: List Announced; Effective 4 July
  • HSCEI Index Rebalance: Bilibili Replaces Sunac Next Week
  • Hang Seng, MSCI China Near Major Base Breakouts; Bottoms-Up Stock Rec’s in Hong Kong, China, & Japan
  • Index Rebalance & ETF Flow Recap: FTSE JP, HSTECH, HSCEI, PCOMP, GCL Tech, Tencent, Tianqi Lithium
  • Buying the Most Unloved Asian Market

ETFs in Stock Connect: List Announced; Effective 4 July

By Brian Freitas

  • CSRC and SFC have approved the inclusion of eligible ETFs in Stock Connect and trading of the ETFs under Stock Connect would begin from 4 July.
  • There are 4 ETFs included in Southbound Stock Connect, while there are 83 ETFs that have been included in Northbound Stock Connect.
  • Under Stock Connect, only secondary trading is allowed in the ETFs with no creations or redemptions permitted. This will have implications for short-term and long-term repo on the HSI/HSCEI/HSTECH indices.

HSCEI Index Rebalance: Bilibili Replaces Sunac Next Week

By Brian Freitas


Hang Seng, MSCI China Near Major Base Breakouts; Bottoms-Up Stock Rec’s in Hong Kong, China, & Japan

By Joe Jasper

  • Broad global MSCI equity indexes (ACWI,ACWI ex-U.S.,EAFE, and EM) remain bearish with YTD downtrends intact. Until these indexes reverse downtrends, we are bearish and view bounces as bear market rallies.
  • Major non-U.S. countries appear to be much further along in the bottoming process, a potential sign that U.S. indexes could take a back seat once global equities finally bottom.
  • Indexes that have not made a new low since March: Nikkei 225, TOPIX, TOPIX Small, Hang Seng, Europe’s EURO STOXX 50, and China’s MSCI China (MCHI-US) and China Internet (KWEB-US).

Index Rebalance & ETF Flow Recap: FTSE JP, HSTECH, HSCEI, PCOMP, GCL Tech, Tencent, Tianqi Lithium

By Brian Freitas


Buying the Most Unloved Asian Market

By Thomas Schroeder

  • Korea is a market we have been shorting from the summer of 2021 and just turned long near compelling physical support.
  • Closed short positions from 366 and 353 for gains of 20% and 15%. A rally opportunity should open up if the global cycle gets a few lifts in July.
  • 300 price support from 2020-21 previous highs and lows makes for a natural platform for short covering that may lead to a move to 324/328 where noted retracements lie.

Before it’s here, it’s on Smartkarma

Most Read: Hang Seng China Enterprises Index, Shinko Electric Industries, Tesla Motors, LG Energy Solution and more

By | Daily Briefs, Most Read

In today’s briefing:

  • HSCEI Index Rebalance: Bilibili Replaces Sunac Next Week
  • JPX-Nikkei 400 2022 Rebal: Final Predictions
  • Elon Suddenly Admits Massive Tesla Losses (Because Other News Out Soon Is Even Worse)
  • End of Mandatory Lock-Up Periods for 40 Companies in Korea in July 2022
  • Defensive & Diversifying Strategies in YTD 2022

HSCEI Index Rebalance: Bilibili Replaces Sunac Next Week

By Brian Freitas


JPX-Nikkei 400 2022 Rebal: Final Predictions

By Janaghan Jeyakumar, CFA

  • JPX-Nikkei 400 is composed of stocks listed on the Tokyo Stock Exchange selected based on multiple metrics relating to size, liquidity, financial performance, and corporate governance.
  • The annual rebalance of the JPX-Nikkei 400 Index takes place in August every year and the cut-off date for the data used for this rebalance is the end of June.
  • In this insight, we take a look at Quiddity’s final predictions for Potential ADDs/DELs for the August 2022 review.

Elon Suddenly Admits Massive Tesla Losses (Because Other News Out Soon Is Even Worse)

By Vicki Bryan

  • Elon Musk suddenly admitted Tesla is burning billions at its Austin & Berlin plants.
  • This happened to come just as he likely saw Q2 becoming “super bad,” as I had warned, since plunging China sales mean Tesla can’t mask big losses as usual.
  • Tesla’s problems are bigger than second quarter woes—and they’re not going away anytime soon.

End of Mandatory Lock-Up Periods for 40 Companies in Korea in July 2022

By Douglas Kim

  • We discuss end of the mandatory lock-up periods for 40 stocks in Korea in July 2022, among which 7 are in KOSPI and 33 are in KOSDAQ.
  • These 40 stocks on average could be subject to further selling pressures in July and could underperform relative to the market. 
  • Among these 40 stocks, LG Energy Solution (373220 KS) and Heung A Shipping (003280 KS) could face further selling pressures in the coming weeks.

Defensive & Diversifying Strategies in YTD 2022

By Nicolas Rabener

  • Most defensive and diversifying strategies generated negative returns in YTD 2022
  • The correlation of almost all of these strategies to equities was too high
  • Only managed futures generated attractive diversification benefits in YTD 2022

Before it’s here, it’s on Smartkarma

Most Read: SenseTime Group, HKEX, Tianqi Lithium, Softbank Group and more

By | Daily Briefs, Most Read

In today’s briefing:

  • SenseTime (20 HK): Lock-Up Expiry Will Bring BIG Passive Flow
  • ETFs in Stock Connect: List Announced; Effective 4 July
  • Tianqi Lithium (9696 HK): Big Discount to A-Shares & Index Inclusion Timeline
  • Tianqi Lithium A/H Listing – Large Deal but Its Been Priced to Go
  • Softbank Group – Expiration of SenseTime Lock-Up Has Lopped $1.5bn off the VF Valuation

SenseTime (20 HK): Lock-Up Expiry Will Bring BIG Passive Flow

By Brian Freitas

  • SenseTime Group (20 HK) currently has a float of 1.4%. That will increase to 46% at the end of June as pre-IPO and cornerstone investor lock-ups end.
  • The Hang Seng Tech Index FAF increase and potential inclusion in the Hang Seng China Enterprises Index will require passive trackers to buy 700m shares early September.
  • Economic stimulus in China, outlook for China tech, lock-up expiry, inclusion in Southbound Connect and flows from passive trackers will drive the stock for few months and provide trading opportunities.

ETFs in Stock Connect: List Announced; Effective 4 July

By Brian Freitas

  • CSRC and SFC have approved the inclusion of eligible ETFs in Stock Connect and trading of the ETFs under Stock Connect would begin from 4 July.
  • There are 4 ETFs included in Southbound Stock Connect, while there are 83 ETFs that have been included in Northbound Stock Connect.
  • Under Stock Connect, only secondary trading is allowed in the ETFs with no creations or redemptions permitted. This will have implications for short-term and long-term repo on the HSI/HSCEI/HSTECH indices.

Tianqi Lithium (9696 HK): Big Discount to A-Shares & Index Inclusion Timeline

By Brian Freitas

  • Tianqi Lithium (9696 HK) is looking to sell up to 188.74m shares to raise up to US$1.97bn. Pricing at HK$69-82/share is a 52-43% discount to Tianqi Lithium (002466 CH).
  • Between 32-38% of the total offer size is being taken by 7 cornerstone investors and they are locked in for 6 months from listing date (expected 13 July).
  • Tianqi Lithium (9696 HK) could be added to MSCI China in November, FTSE All-World and FTSE China 50 in December. Southbound Stock Connect could come online soon after listing.

Tianqi Lithium A/H Listing – Large Deal but Its Been Priced to Go

By Sumeet Singh

  • Tianqi Lithium (TL) is looking to raise up to US$1.7bn via its H-shares listing. It undertakes mining of lithium ore and manufacturing of lithium concentrate, lithium compounds and derivatives.
  • TL was the largest producer of mined lithium globally in terms of output in 2020 and ranked third in terms of revenue generated from lithium in 2020.
  • In this note, we take about the deal pricing and run the deal through our ECM framework.

Softbank Group – Expiration of SenseTime Lock-Up Has Lopped $1.5bn off the VF Valuation

By Kirk Boodry

  • Just as the December quarter was flattered by the last minute IPO of SenseTime Group (20 HK), expiration of the lockup six months later has delivered a corresonding valuation hit
  • Vision Fund is still up on that investment but the public portfolio is flirting with a $10bn loss for the quarter depending on how US shares trade later
  • The discount has improved modestly to 49% from 51% but remains at the high end of the recent range as worries on tech valuations cast a long shadow 

Before it’s here, it’s on Smartkarma

Most Read: HKEX, SenseTime Group, Sichuan Tianqi Lithium Industries, Inc, Toshiba Corp, MTR Corp and more

By | Daily Briefs, Most Read

In today’s briefing:

  • ETFs in Stock Connect: List Announced; Effective 4 July
  • HSTECH Index Rebalance Preview (Sep): Free Float & Capping Changes To Drive Flows
  • Tianqi Lithium H Share Listing: AH Discount Views
  • Toshiba (6502) Ownership Structure – “Hostage to Toshiba” Larger Than Real World Float
  • MTR (66): Open or Closed?

ETFs in Stock Connect: List Announced; Effective 4 July

By Brian Freitas

  • CSRC and SFC have approved the inclusion of eligible ETFs in Stock Connect and trading of the ETFs under Stock Connect would begin from 4 July.
  • There are 4 ETFs included in Southbound Stock Connect, while there are 83 ETFs that have been included in Northbound Stock Connect.
  • Under Stock Connect, only secondary trading is allowed in the ETFs with no creations or redemptions permitted. This will have implications for short-term and long-term repo on the HSI/HSCEI/HSTECH indices.

HSTECH Index Rebalance Preview (Sep): Free Float & Capping Changes To Drive Flows

By Brian Freitas

  • We do not expect any inclusions or exclusions for the Hang Seng Tech Index (HSTECH INDEX) at the September rebalance.
  • Float and capping changes will lead to a one-way turnover of 6.5% and that will result in a one-way trade of HK$4,913m.
  • SenseTime Group (20 HK) will have the largest buying flow due a potential increase in free float. The stock is also a potential inclusion to the HSCEI INDEX in September.

Tianqi Lithium H Share Listing: AH Discount Views

By Arun George


Toshiba (6502) Ownership Structure – “Hostage to Toshiba” Larger Than Real World Float

By Travis Lundy

  • Every year, the yukashoken hokokusho shows a breakdown of share ownership by owner category. It only happens once a year for most companies. 
  • It is a crucial input to knowing where the shares are and how people are positioned. It also shows who and how big is Real World Float.
  • This year’s data shows a surprisingly small change year-on-year for Foreign Active Ownership, which is the biggest category. A little musical chairs, but no chairs removed. 

MTR (66): Open or Closed?

By Henry Soediarko

  • HK reopening is debatable and seems to be very hard to predict as the Chinese government is keen to keep zero COVID stands although recent quarantine time reduction is positive. 
  • The number of passengers remains weak although the shorter quarantine reduction could provide short-term relief to the share price. 
  • Valuation looks undemanding compared to the peers although the outlook is more uncertain. Stay out for now. 

Before it’s here, it’s on Smartkarma

Most Read: NTT (Nippon Telegraph & Telephone), Tencent, Sea Ltd, Sichuan Tianqi Lithium Industries, Inc and more

By | Daily Briefs, Most Read

In today’s briefing:

  • TOPIX Rebalance: Flows at the Close on 29 June
  • Prosus, Tencent, JD.com – Good Intentions but Questionable Timing
  • Tencent (700 HK): Impact of Prosus Selling & Passive Inflows
  • SEA Lock-Up – Tencent Is once Again About to Be Free to Trim Its US$8bn Stake
  • Tianqi Lithium H Share Listing: AH Discount Views

TOPIX Rebalance: Flows at the Close on 29 June

By Brian Freitas

  • The third tranche of the FFW methodology change for the Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) will be implemented at the close of trading on 29 June.
  • One-Way flow is ~JPY 742bn and will be spread across 2170 stocks. The largest inflow will be on NTT (9432 JP) and the largest outflow on Toyota Motor (7203 JP).
  • Stocks with the largest impact of inflows have outperformed stocks with the largest impact of outflows, but there has been underperformance over the last couple of weeks.

Prosus, Tencent, JD.com – Good Intentions but Questionable Timing

By Sumeet Singh

  • Today Prosus announced that it will begin an open-ended share repurchase programme of Prosus and Naspers shares which will be funded by on-market sale of Tencent shares.
  • Prosus also announced that it has sold its entire shareholding in JD.com, to raise US$3.67bn, on-market in Jun 2022.
  • In this note, we talk about the implication and timing of today’s announcements.

Tencent (700 HK): Impact of Prosus Selling & Passive Inflows

By Brian Freitas

  • Prosus (PRX NA)/ Naspers (NPN SJ) hold 28.78% of Tencent (700 HK) and will be selling Tencent stock to fund their own buyback due to the large discount to NAV.
  • At 3-5% of Tencent (700 HK)‘s ADV, the selling will last from 9-15 years, though could take much longer (or not complete) if Prosus/Naspers’ discount to NAV shrinks considerably.
  • Passive trackers will buy only around 12-14% of the incremental stock and this will lead to a big overhang on Tencent (700 HK) in the near future.

SEA Lock-Up – Tencent Is once Again About to Be Free to Trim Its US$8bn Stake

By Sumeet Singh

  • Tencent sold US$3bn worth of SEA shares in Jan 22. The rest of its stake was locked up for six months.
  • The initial stake sale by Tencent didn’t go down too well and the stock is now trading over 63% below the deal price.
  • In this note, we will talk about the lock-up dynamics and recent updates.

Tianqi Lithium H Share Listing: AH Discount Views

By Arun George


Before it’s here, it’s on Smartkarma

Most Read: PetroChina, NTT (Nippon Telegraph & Telephone), Tencent, Gcl Poly Energy Holdings Limited, Prosus and more

By | Daily Briefs, Most Read

In today’s briefing:

  • HSCEI Index Rebalance Preview: Four Sets of Changes from July to September
  • TOPIX Rebalance: Flows at the Close on 29 June
  • Prosus, Tencent, JD.com – Good Intentions but Questionable Timing
  • GCL Poly (3800 HK): Double Index Inclusion & HUGE Passive Inflows
  • Prosus/Naspers – Operation Ouroboros Commences, And It’s Big (Discount, Flows, Index Impact)

HSCEI Index Rebalance Preview: Four Sets of Changes from July to September

By Brian Freitas


TOPIX Rebalance: Flows at the Close on 29 June

By Brian Freitas

  • The third tranche of the FFW methodology change for the Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) will be implemented at the close of trading on 29 June.
  • One-Way flow is ~JPY 742bn and will be spread across 2170 stocks. The largest inflow will be on NTT (9432 JP) and the largest outflow on Toyota Motor (7203 JP).
  • Stocks with the largest impact of inflows have outperformed stocks with the largest impact of outflows, but there has been underperformance over the last couple of weeks.

Prosus, Tencent, JD.com – Good Intentions but Questionable Timing

By Sumeet Singh

  • Today Prosus announced that it will begin an open-ended share repurchase programme of Prosus and Naspers shares which will be funded by on-market sale of Tencent shares.
  • Prosus also announced that it has sold its entire shareholding in JD.com, to raise US$3.67bn, on-market in Jun 2022.
  • In this note, we talk about the implication and timing of today’s announcements.

GCL Poly (3800 HK): Double Index Inclusion & HUGE Passive Inflows

By Brian Freitas

  • After being suspended for 7 months for not publishing its 2020 annual results, Gcl Poly Energy Holdings Limited (3800 HK) resumed trading on 1 November 2021.
  • We expect Gcl Poly Energy Holdings Limited (3800 HK) to be added to the MSCI China Index in August and to the FTSE All-World Index in September.
  • Passive index trackers will need to buy over US$1.1bn of stock over the next few months. The stock has run-up inline with peers and this demand could keep it supported.

Prosus/Naspers – Operation Ouroboros Commences, And It’s Big (Discount, Flows, Index Impact)

By Travis Lundy

  • I wanted to write this insight over the weekend but could not finish it, but now there is new news to warrant it. 
  • Today, Prosus (PRX NA)  announced it had sold the 131,873,028 JD.com Inc. (9618 HK) shares it received in the Tencent (700 HK) distribution. This is as expected. Proceeds were US$3.67bn.
  • Also announced this morning is “the beginning of an open-ended share repurchase programme of Prosus and Naspers (NPN SJ) shares.” The details are the key to everything

Before it’s here, it’s on Smartkarma

Most Read: NTT (Nippon Telegraph & Telephone), Gcl Poly Energy Holdings Limited, SenseTime Group, West African Resources, Hanmi Science and more

By | Daily Briefs, Most Read

In today’s briefing:

  • TOPIX Rebalance: Flows at the Close on 29 June
  • GCL Poly (3800 HK): Double Index Inclusion & HUGE Passive Inflows
  • Last Week in Event SPACE: Toshiba, Hutch Tel, SenseTime, Giordano, DTAC/True, Toyo Const., ResApp
  • Index Rebalance & ETF Flow Recap: HSCI, SET50, S&P/ASX, MSCI, EMP PM, AMRT IJ, AMFI, SKT/KT
  • KOSPI Size Index Series: September Rebalancing Preview

TOPIX Rebalance: Flows at the Close on 29 June

By Brian Freitas

  • The third tranche of the FFW methodology change for the Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) will be implemented at the close of trading on 29 June.
  • One-Way flow is ~JPY 742bn and will be spread across 2170 stocks. The largest inflow will be on NTT (9432 JP) and the largest outflow on Toyota Motor (7203 JP).
  • Stocks with the largest impact of inflows have outperformed stocks with the largest impact of outflows, but there has been underperformance over the last couple of weeks.

GCL Poly (3800 HK): Double Index Inclusion & HUGE Passive Inflows

By Brian Freitas

  • After being suspended for 7 months for not publishing its 2020 annual results, Gcl Poly Energy Holdings Limited (3800 HK) resumed trading on 1 November 2021.
  • We expect Gcl Poly Energy Holdings Limited (3800 HK) to be added to the MSCI China Index in August and to the FTSE All-World Index in September.
  • Passive index trackers will need to buy over US$1.1bn of stock over the next few months. The stock has run-up inline with peers and this demand could keep it supported.

Last Week in Event SPACE: Toshiba, Hutch Tel, SenseTime, Giordano, DTAC/True, Toyo Const., ResApp

By David Blennerhassett

  • There is a risk that the ¥7,000/share bid for Toshiba Corp (6502 JP) gets pulled/lowered in Round 2 because of due diligence, conditionality, market environment, etc.
  • Hutchison Telecommunications Hong Kong Holdings (215 HK)‘s share price was up 33% month to date, on triple the average daily volume. Then promptly sheds 23% on an even larger volume. 
  • Even if one assumes that Softbank, Baba, and Cornerstones won’t sell, there is still 45% of SenseTime Group (20 HK) of shares out, worth US$11bn, unlocking next week.

Index Rebalance & ETF Flow Recap: HSCI, SET50, S&P/ASX, MSCI, EMP PM, AMRT IJ, AMFI, SKT/KT

By Brian Freitas

  • No changes for Asia Pacific at the MSCI Annual Market Classification Review. Lots of improvements needed for Korea to move from EM to DM in June 2025 at the earliest.
  • Lots of changes expected for the HSCI and S&P/ASX family in September. Emperador Inc (EMP PM) and Sumber Alfaria Trijaya Tbk Pt (AMRT IJ) are potential FTSE inclusions in September.
  • Shimao Services Holdings Limited (873 HK) started trading on Thursday and MSCI has announced the deletion of the stock from the MSCI China Index at the close on 27 June.

KOSPI Size Index Series: September Rebalancing Preview

By Sanghyun Park

  • We generally detect an increase in the buying volume of local institutions for stocks moving from Large Cap to Mid Cap ahead of the KOSPI size index rebalancing.
  • At the last close, Mid→Large: Pan Ocean, Hyundai Mipo, BGF Retail, & OCI / Large→Mid: Hanmi Science, KCC, DB Hitek, & KEPCO E&C
  • The level of price impact/correlation in the last rebalancing was exceptionally high. This is reason enough for us to consider setting up a preemptive position for this rebalancing event.

Before it’s here, it’s on Smartkarma

Most Read: Giordano International, iShares MSCI ACWI ETF, Korea Stock Exchange Kospi 200 Index, SOCAR Inc and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Giordano (709 HK): Cheng Family’s Underwhelming Offer
  • Inflation Peaking?; ACWI, ACWI Ex-US Near Support; Many Bottoms-Up Stock Recommendations
  • Korea May Continue to Fail MSCI DM Inclusion Unless Allowing for K200 Options Listing on SGX
  • Socar IPO Preview
  • SOCAR IPO: Another Absurd Valuation

Giordano (709 HK): Cheng Family’s Underwhelming Offer

By David Blennerhassett

  • The Cheng family has made a voluntary conditional Offer of $1.88/share for Giordano International (709 HK)
  • The Cheng’s (and concert parties) control 24.57%. The Offer is conditional on the family getting to more than 50% via tendering. 
  • The intention is to maintain Giordano’s listing. The Offer Price has not been declared final. 

Inflation Peaking?; ACWI, ACWI Ex-US Near Support; Many Bottoms-Up Stock Recommendations

By Joe Jasper

  • Many indexes (ACWI-US,ACWX-US,etc.) are near support, and we could see a bear market bounce, but until these indexes reverse their downtrends and break above resistance levels, we cannot be bullish.
  • On a positive note, we are starting to see signs that inflation is peaking, as commodity prices have pulled back substantially, and the Energy/Materials Sectors are under significant pressure.
  • If inflation and commodity prices have indeed peaked, global equities are likely in the early stages of a bottoming process.

Korea May Continue to Fail MSCI DM Inclusion Unless Allowing for K200 Options Listing on SGX

By Sanghyun Park

  • The KRX and the MSCI have not agreed on the full right to use the KRX indexes’ price information. This should be the essential cause of Korea’s failed DM inclusion.
  • The MSCI wants to list the KOSPI 200 Options on the SGX, which the MSCI sees as a prerequisite for taking the lead in the Korean passive market.
  • Suppose the government takes a forward-looking approach to this issue. In that case, we may see the K200 Options SGX listing that has a bigger market impact before DM inclusion.

Socar IPO Preview

By Douglas Kim

  • Socar, the largest car sharing platform in Korea, is getting ready to complete its IPO in KOSPI. The IPO base case offering size is from $120 million to $159 million.
  • The IPO price range is from 34,000 won to 45,000 won. The expected market cap of the company is from 1.2 trillion won to 1.6 trillion won.
  • Book building for the institutional investors starts on 1 August. Mirae Asset Securities and Samsung Securities are the lead underwriters in this IPO. 

SOCAR IPO: Another Absurd Valuation

By Sanghyun Park

  • This IPO’s valuation is the trickiest among Korea’s recent IPOs. Whether all of these ten valuation peers have high enough business relevance to SOCAR is highly doubtful.
  • Whether SOCAR can evolve from a simple car sharing (or rental) operator to an in-vehicle software platform provider actually determines the success or failure of this IPO.
  • However, the IPO prospectus available to us lacks the evidence to favorably judge SOCAR’s growth potential. So, I will consider taking this IPO as conservatively as possible.

Before it’s here, it’s on Smartkarma

Most Read: West African Resources, Giordano International, Hutchison Telecommunications Hong Kong Holdings, Kakao Pay, iShares MSCI South Korea Index Fund (ETF) and more

By | Daily Briefs, Most Read

In today’s briefing:

  • S&P/​​ASX Index Rebalance Preview (Sep): Plenty of High Impact Changes
  • Giordano (709 HK): Cheng Family’s Underwhelming Offer
  • Hutch Tel (215 HK): Something’s Brewing
  • Kakao Pay’s MSCI Float Should Be 55% at Aug QIR Based on the Case of Kakao Games
  • MSCI Annual Market Classification Review: Korea Doesn’t Make It to the Watchlist

S&P/​​ASX Index Rebalance Preview (Sep): Plenty of High Impact Changes

By Brian Freitas

  • There could be one change to the S&P/ASX 200 (AS51 INDEX) in July following the privatisation of Uniti Group Ltd (UWL AU)
  • Then there will be a whole bunch of changes to the S&P/ASX 100 Index, S&P/ASX 200 (AS51 INDEX) and S&P/ASX 300 Index in September as part of the regular rebalance. 
  • There is large short interest on a couple of the potential adds and a lot of the potential deletes. That will drive stock price moves closer to implementation.

Giordano (709 HK): Cheng Family’s Underwhelming Offer

By David Blennerhassett

  • The Cheng family has made a voluntary conditional Offer of $1.88/share for Giordano International (709 HK)
  • The Cheng’s (and concert parties) control 24.57%. The Offer is conditional on the family getting to more than 50% via tendering. 
  • The intention is to maintain Giordano’s listing. The Offer Price has not been declared final. 

Hutch Tel (215 HK): Something’s Brewing

By David Blennerhassett

  • Hutchison Telecommunications (215 HK)‘s share price is up 33% month to date.
  • The average volume in June has been 11.9mn shares per day, compared to 3.8mn shares on average over the past year, and 3mn in the past six months. 
  • Of interest, Southbound buying has accelerated in the last two weeks, with a holding of 0.76% of shares out, up from 0.11% at the beginning of the month. 

Kakao Pay’s MSCI Float Should Be 55% at Aug QIR Based on the Case of Kakao Games

By Sanghyun Park

  • The MSCI immediately included 4.31% owned by Netmarble in Kakao Games’ float by applying one of the exception rules in Sections 3.2.4 or 3.2.5 of the MSCI GIMI Methodology Book.
  • The exception rule used here must have been this one: Re-estimating free float figures resulting from the reclassification of shareholders from strategic to non-strategic.
  • I can’t find a reason why this practice of the MSCI shouldn’t be equally applied to Alipay’s Kakao Pay stake.

MSCI Annual Market Classification Review: Korea Doesn’t Make It to the Watchlist

By Brian Freitas

  • MSCI had announced the results of the 2022 Global Market Accessibility Review earlier this month. Based on that, no changes were expected at the Market Classification Review.
  • Earlier this morning, MSCI announced the results of the Market Classification Review and there are no changes for Asia.
  • Korea has not been placed on the watchlist for an upgrade from Emerging to Developed Market. The earliest that Korea could be reclassified from EM to DM is now 2025.

Before it’s here, it’s on Smartkarma